Sabra Reports ‘Strong’ 3Q26 Earnings Tilted to SHOP

Sabra Healthcare REIT, Inc. (Nasdaq: SBRA) on Nov. 2 said financial results for the third quarter of the year came in strong with margins for its senior housing (SHOP) portfolio “among the best in the space” as were its occupancy levels.

The company said it continues to seek ways to shift away from skilled nursing properties to senior housing.

Rick Matros, CEO and Chair of Sabra, said, “Sabra delivered another strong quarter. Same store SHOP Cash NOI [net operating income] margins and REVPOR growth are among the best in the space accompanied by solid occupancy and cash NOI growth.”

He said “investment activity continues to be robust, with $425 million currently awarded and more expected to come before year end. We expect our SHOP concentration to be around 40 percent on a run rate basis by year end 2026 and 50 percent by the end of 2027. We continue to evaluate our skilled nursing portfolio for optimization opportunities along the lines of our July announcement.”

Matros said the company’s triple-net skilled nursing and senior housing portfolios again showed increased rent coverage.

“Leverage ticked down, and we increased our guidance at the midpoint. We do not foresee any barriers that would slow down our current momentum and the shift in our portfolio mix to be more heavily weighted towards SHOP, which will continue to be supported by an exceptionally strong triple-net skilled nursing portfolio.”

By the Numbers

Earnings per diluted common share for the third quarter of 2026 saw net income of $0.11 versus the Wall Street estimate for $0.1637, FFO of $0.40, normalized FFO of $0.39, AFFO of $0.45, and normalized AFFO of $0.41.

(FFO - Funds from Operations - is a non‑GAAP measure widely used for REITs. It starts with GAAP net income and adds back depreciation and amortization related to real estate, while excluding gains/losses from property sales and certain other items. Normalized FFO takes that FFO figure and excludes additional non‑operating or one‑time items that are not part of the REIT’s regular business.)

Sabra’s EBITDARM Coverage Summary showed:

-          Skilled Nursing/Transitional Care: 2.52x

-          Senior Housing - Leased: 1.58x

-          Specialty Hospitals and Other: 3.91x

On a year-over-year basis, same property SHOP Cash NOI increased 14.6 percent for the third quarter of 2026.

Deals and Transitions

Sabra had previously said it closed on the acquisition of seven SHOP communities for an aggregate price of $222.8 million in the third quarter with an estimated yield of 7.7 percent.

Investments closed year to date total $747.2 million, with an estimated yield of 8 percent.

“Sabra has been awarded an additional $425 million of investments, of which about $385 million is SHOP, $25 million is skilled nursing, and $15 million is preferred equity, with an estimated yield of 7 percent,” the company said. “These investments are currently in the Letter of Intent or later stage, and Sabra expects to fund these investments, if consummated, with available liquidity, including proceeds from outstanding forward sales agreements under its at-the-market equity offering program [ATM program],” the company said.

On Oct. 1, Sabra completed the previously announced transition of 26 properties formerly leased to Avamere, with 22 properties being transitioned to subsidiaries of Cascadia Healthcare and four properties being transitioned to subsidiaries of the Ensign Group. As a result of this transition, effective Oct. 1, annualized cash rent for these properties increased to $53 million from $48 million, the company said.

Sabra also said it is updating its 2026 earnings guidance ranges as follows - per diluted common share:

-          Net Income: $0.265 - $0.275

-          FFO: $1.145 - $1.155

-          Normalized FFO: $1.540 - $1.550

-          AFFO: $1.625 - $1.635

-          Normalized AFFO: $1.600 - $1.610

Liquidity and Portfolio

As of Sept. 30, Sabra had approximately $1.2 billion of liquidity, consisting of unrestricted cash and cash equivalents of $36.2 million, available borrowings under our revolving credit facility of $873.5 million, and $292.5 million related to shares outstanding under forward sale agreements under the ATM program.

As of Sept. 30, Sabra’s investment portfolio included 364 real estate properties held for investment consisting of ((207 skilled nursing/transitional care facilities, 32 senior housing communities, 24 specialty hospitals and other facilities, and 101 senior housing communities operated by third-party property managers pursuant to property management agreements (Senior Housing Operating Portfolio, or SHOP)), 11 investments in loans receivable (consisting of two mortgage loans and nine other loans), four preferred equity investments, and two investments in unconsolidated joint ventures.

Also, as of Sept. 30, Sabra’s real estate properties held for investment included 37,513 beds/units, spread across the U.S. and Canada.

Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.